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Tuesday, 10 November 2015

"IP scammers face record financial liability" is the happy title of a communication received by this Kat from his friends at the UK Intellectual Property Office. Their message reads, in relevant part, as follows:
10 November 2015

Company scamming IPO customers found liable for trade mark infringement and passing off.

A prolific and persistent scammer, responsible for deliberately scamming Intellectual Property Office (IPO) customers, was today found liable for trade mark infringement and passing off and ordered to pay £500,000 plus legal costs.

A company trading as ‘Intellectual Property Agency Ltd (IPA)’ [referred to by the court in its judgment as IPAL; incorporated in the Seychelles with a registered office address in Mahé, Seychelles, IPAL also gave a London address in Broadgate Tower, Primrose Street, EC2, plus a forwarding address in Barcelona and an address in Brussels] and the director Mr Harri Mattias Jonasson [who lives in Stockholm, Sweden] were found to have deliberately set out to deceive intellectual property owners by issuing scam renewal notices. By giving the impression that IPA was the IPO, or connected with it, IPA was able to persuade owners of trade marks and patents to engage it to renew those rights at a cost of up to 6 times the official renewal fees.

The judgment handed down by the Intellectual Property Enterprise Court (IPEC) provides the IPO with the maximum financial award possible from this court. ...

Initially IPA offered to negotiate and mediate, but ultimately they were unwilling to provide all the legal undertakings the IPO required. IPA instead filed a defence at the IPEC early in December 2014. The judgment today follows a hearing that took place at the IPEC on 29 September.

The IPO is working to educate its customers about the danger posed by scammers such IPA by issuing explicit warnings to users of the IPO naming the organisations concerned. Warning messages have also been placed on the IPO web site and other similar international IP offices such as OHIM and the European Patent Office.

Customer feedback has shown an overall reduction in scam renewal notices. In 2014, 262 people told the IPO that they had received such notices compared to 848 in 2013 [no, says Merpel, this only means that fewer people have told the IPO, not that the number of notices received has been reduced. Maybe more sensible souls are ignoring them or throwing them away rather than paying up, and don't therefore feel so incensed that they want to complain to the IPO].

During 2015, the total number of customer complaints about scam renewals as of the end of October was 224. The judgment of IPEC is therefore an important step in the continuing fight to stop the scammers.

The ruling in question is Comptroller-General of Patents, Designs and Trade Marks & Another v Intellectual Property Agency Ltd & Another [2015] EWHC 3256 (IPEC), a decision of the gentle, affable Judge Richard Hacon. The learned judge observed towards the end of his judgment:

"IPAL received a total of £1,334,234 from rightholders who responded to its Reminder form and paid out £227,724 to the IPO to renew their rights. That translates into a gross profit of £1,106,510".

Since £500,000 is that maximum award that the IPEC can make, it seems to Merpel that Mr Jonasson -- who did not appear in these proceedings and was not represented -- did rather better out of it than the IPO did, assuming that £1,106,510 minus £500,000 = £606,510 [that's around US$ 917K or euro 855K at today's rates]. Or has she missed something? No injunction was sought.

17 comments:

The IPO is commended for taking this action that nibbles at the edges of a much larger problem.

The damage on which the passing-off action was founded was damage to the reputation of the IPO, and an account of profits ordered. The amount awarded was subject to the IPEC limit of £500k. The damage done to the public was twice this.

This raises a number of questions:-1) Will the IPO be sharing the award (assuming any money is ever received) with those who mistakenly paid IPAL?2) Does the decision tell scammers not to be too clever in looking like an official document?3) Does the IPO have any figures to calculate how much is lost to scammers? A rough calculation shows that this one person's activities amounted to about 1.5% of the IPOs annual income for renewal fees. IPAL are not the only scammers..4) How much of the problem is down to credulity of users and how much to lack of distinctiveness of IPO notifications?5) If some users will pay £750 for payment of a £250 fee are IP professionals missing a business opportunity?

In short, we knew an iceberg was out there, we have now seen the size of the tip, more must be done to ensure that ill-informed or hurried users aren't scammed.

Knowing how governments are always looking for ways to raise money, I suspect that the £500k will be treated as a windfall and creamed off to the BIS as a "Special Dividend", based on the premise that the BIS is the (sole) shareholder of the IPO business. That is what seems to have happened in previous years when the IPO's balance sheet showed a notional profit.

I was a little surprised to read in paragraph 40 of the judgment: "Neither of the Defendants filed a response to the Points of Claim and so they stand admitted."

Rule 16.5(4) of the CPR provides that "Where the claim includes a money claim, a defendant shall be taken to require that any allegation relating to the amount of money claimed be proved unless he expressly admits the allegation."

He did at least pay the fees so a service of real value was delivered - various versions go out when fees are not due and these are clearly more profitable. Given the recent Supreme Court decisions businesses making bad bargains are not going to get much judicial sympathy so the IPO can only rely on passing off and trademark infringement. Kudos to them for doing so

Poor decision. Lack of mispresentation. If someone sells 'Pepsi' as being the "Best Cola Around" and I buy it believing it to be 'Coke', because I believe that to be the best cola around, I am just dim. There has been no misrepresentation.

The decision may also suggest that every sale of non-branded foodstuff is passing off, because all consumers now believe everything to be made by the brand-owner, but packaged differently.

Having read the decision I would say that, although there was clear passing off, the judge was very, very generous in finding that there had been trade mark infringement.

The judge found that the almost completely non-distinctive INTELLECTUAL PROPERTY OFFICE is confusingly similar to the similarly non-distinctive INTELLECTUAL PROPERTY AGENCY LTD and in making this assessment he completely ignored the distinctive crown logo that forms a significant (dominant?) part of the IPO's registration. To me it appears that the judge has simply stretched the law to try and arrive at what he considers to be the "correct" outcome. Incidentally, the trade mark that the IPO relied on is one they no longer use.

I guess that the management consultants who presumably had a hand in the Patent Office's change of trading name, failed to appreciate that the Patents Act 1977 only protects the expression "Patent Office" or similar wording. I also guess that, at the time the change took place, the higher echelons of the Patent Office were populated by staff from other parts of the Civil Service rather than by people who had been examiners and who were actually conversant with the Patents Act.

Re "Zebedee", the IPO has for some years been an agency which now gets all its income (the recent £500k is an notable exception) from the fees paid by its users, so it is only the IPO's users users who are paying for its activities, not the taxpayer in general.

IPaidALot asks whether this opens the doors for those who paid up to bring a civil suit for recovery of money paid from IPAL. It certainly does; see http://www.cearta.ie/2015/12/the-ipo-takes-down-a-scammer-and-opens-the-door-to-restitution-claims-by-rightsowners/Merpel asks whether the scammer has really triumphed by retaining £606,510? Given that the defendants here are also liable to the rightsholders, the scammer has not triumphed. And to the extent that the IPO can recover from a Seychelles company with a Swedish principal, then the rightsholders can too.

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